How to check the trial balance: 4 tests
In the monthly depreciation lesson the caterer posted September's last adjusting entries. Before the lock, check the adjusted trial balance: every ledger account with its debit or credit balance on 30 September. Equal debit and credit totals are a first condition, not proof: an entry left out, or posted to the wrong account, leaves them equal. So run 4 checks: balance and complete adjustments, the side of each balance, key accounts against their records, and a comparison with last month.
Example: September balances, with two errors
After those entries, September's trial balance came out at SAR 912,400 a side, yet held two errors: a SAR 3,450 vegetable supplier payment on 29 September whose invoice, a photo in the WhatsApp group, was never posted; and a SAR 7,500 freezer, before VAT, booked as maintenance. Neither upset the balance; both change the month's profit.
Check 1: confirm it is adjusted and balanced
The unadjusted trial balance shows balances as posted; the adjusted one adds accruals, prepayments and depreciation. Review the adjusted one, one net balance per account, with every adjusting entry dated 30 September, not October. Then compare the totals. A system that rejects unbalanced entries always agrees, so the next three checks find the errors, such as:
| Error | Why the totals still agree |
|---|---|
| An entry left out entirely | Both sides are missing |
| An entry in the wrong account | Right amount, right side |
| Wrong amount on both sides | Equal error on each side |
| Debit and credit reversed | Both sides rose equally |
Check 2: test the side of each balance
Each account has a normal side; a balance on the other is an error until explained:
| Account | Normal side, and what the opposite means |
|---|---|
| Cash on hand | Always debit: no paying out more than came in |
| Customers | Debit; credit means an advance or a duplicate receipt |
| Suppliers | Credit; debit means a payment with no invoice posted |
| Accumulated depreciation | Always credit |
The vegetable supplier showed a SAR 3,450 debit with no advance paid, so an invoice was missing: SAR 3,000 of vegetables plus SAR 450 VAT. Post the invoice itself, on its date, not a journal for the payment: Article 49(7) of ZATCA's VAT Implementing Regulations (official Arabic text) allows input VAT deduction only with evidence, normally the supplier's tax invoice. For matching suppliers to statements, see supplier statement reconciliation.
Check 3: match key accounts to their records
Some balances have an independent source; clear any gap before the lock:
- Bank: the approved balance in your bank reconciliation.
- Customers: the aged receivables total, customer by customer.
- Fixed assets and accumulated depreciation: the asset register totals.
- Output and input VAT: the VAT on the month's sales and purchase invoices, the figures for your return.
Check 4: compare with last month and explain every jump
Set August's trial balance beside it, with a rule for changes needing a written reason, say above 20% and SAR 1,000 together. Maintenance jumped from SAR 1,100 to SAR 8,600: the SAR 7,500 freezer, above the SAR 2,000 asset threshold, belongs in fixed assets. Moving it raises September's profit by SAR 7,500, and depreciation starts in October, as it was ready on 22 September, after the 15th. Actuals against budget come after the lock, in actual vs budget.
Running it from WhatsApp
Owner (30 September): Send September's adjusted trial balance
System: Balanced at SAR 912,400 each side, adjustments dated 30 September. Bank, customers, assets and VAT match their records. Two notes: the vegetable supplier has a SAR 3,450 debit, a 29 September payment with no invoice. And maintenance is SAR 8,600 against 1,100 in August, 7,500 of it a freezer.
Accountant: Vegetable invoice photo: 3,000 plus 450 VAT
System: Posted on 29 September with SAR 450 input VAT. The supplier's balance is now zero.
Owner: The freezer is for 5 years, no value after. Running since 22 September
System: Moved to fixed assets and the register at SAR 7,500: SAR 125 a month from October. Still SAR 912,400 each side; September's profit is up SAR 4,500. No open notes: September is ready to lock.
Neither fix moved the totals: balancing was never proof. More on Arabic accounting from your phone, and every close step in the monthly financial close.
Checklist before the lock
- Are all adjusting entries in, dated the month's last day?
- Do the totals agree, knowing that proves little?
- Is every balance on its normal side, or explained?
- Do bank, customers, assets and VAT match their records?
- Does every change above your threshold have a written reason?